SM Energy Co (SM)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,106,880 | 1,005,830 | 1,579,480 | 209,123 | -795,715 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 4,237,260 | 3,615,850 | 3,085,460 | 2,063,130 | 2,016,160 |
| Return on total capital | 26.12% | 27.82% | 51.19% | 10.14% | -39.47% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,106,880K ÷ ($—K + $4,237,260K)
= 26.12%
SM Energy Co's return on total capital has shown significant fluctuations over the past five years.
The ratio was negative at -39.47% as of December 31, 2020, indicating that the company was not efficiently utilizing its total capital to generate profits during that period.
However, there was a turnaround in the following years as the return on total capital improved to 10.14% by December 31, 2021. This suggests that the company started to generate positive returns on its total invested capital.
The most notable increase occurred by December 31, 2022, with a return on total capital of 51.19%. This sharp rise indicates a substantial improvement in the company's ability to generate profits relative to its total capital employed.
Subsequently, by December 31, 2023, the return on total capital slightly decreased to 27.82%, but still remained at a relatively high level compared to the initial years analyzed.
By the end of December 31, 2024, the return on total capital stood at 26.12%, indicating a stable performance in efficiently utilizing the total capital to generate returns.
Overall, the trend demonstrates that SM Energy Co has made significant progress in enhancing its profitability relative to the total capital invested over the five-year period, with notable improvements achieved in the later years.
Peer comparison
Dec 31, 2024